Lawmakers are looking for answers from the ousted head of the Internal Revenue Service as well as an IRS watchdog, sending the investigation into how the agency targeted conservative groups and failed to disclose its actions into high gear. The hearing started at 9 a.m. ET. Watch live video of the hearing.

More background: In the first major move by Obama in reaction to the IRS scandal, President Obama announced earlier this week that Miller would step down over the targeting of conservative groups that had applied for tax-exempt status.

George, meanwhile, is the head of the Treasury Inspector General for Tax Administration. TIGTA issued a report earlier this week that said beginning in 2010 “ineffective management…allowed inappropriate criteria to be developed and stay in place for more than 18 months” and resulted in substantial delays in processing certain applications, and allowed unnecessary information requests to be issued.

The inspector general’s report said that as of Dec. 17, it had reviewed 296 applications from groups seeking tax-exempt status that had been set aside for scrutiny by a team of specialists. Of those, 108 had been approved, 28 were withdrawn by the applicant, none had been denied, and 160 were open from 206 to 1,138 calendar days.

Steven Miller, the recently ousted acting commissioner, may not be able to shed much light on what happened in the Cincinnati field office tasked with reviewing applications for tax-exempt status, but he may be able to clear up, once and for all, whether the targeting of tea-party groups was isolated to that office or went higher up the food chain. Expect Republicans to spend a lot of time trying to pinpoint responsibility. And keep in mind: Mr. Miller wasn’t even the acting commissioner when most of the alleged misdeeds took place.

The more interesting testimony today may come from J. Russell George, the Treasury inspector general for Tax Administration, whose report fed this week’s firestorm. His timeline makes it clear that the scrutiny began in the Cincinnati office in March of 2010, but the detailed chronology left plenty of holes, particularly who decided to ignore directives from Washington not to search for tea-party groups. Mr. George could fill in some of those holes today.

OK, here we go. House Ways and Means Committee Chairman Dave Camp (R., Mich.) opens the hearing with harsh words, saying that lawmakers had been lied to and that the revelations were “just the tip of the iceberg.”

Camp, the top Republican on the tax-writing committee, complained that there had been other violations, including the disclosure of confidential information provided to the IRS. He asked the IRS who started targeting conservative groups, who knew, why it went on for so long, and why the IRS was not forthcoming when lawmakers asked whether conservatives were being targeted.

More from Camp: “Despite a two-year long investigation by this committee, the IRS never told the American people or their representatives about this simple truth.” He adds: “In fact, we were repeatedly told no such targeting was happening. That isn’t being misleading; that is lying.”

Camp: “Mr. Miller, with all due respect, this systemic abuse cannot be fixed with just one resignation.” (Miller was forced out earlier this week.) “And, as much as I expect more people need to go, the reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive, and too abusive of honest, hardworking taxpayers.”

Camp, in the opening statement, expands the dragnet to include IRS leaks of conservative groups’ applications to the media, including Crossroads GPS. ProPublica this week said the IRS office in Cincinnati gave them applications that had not yet been approved – a clear violation of agency protocols. This line of inquiry allows Republicans to paint the agency as blatantly political by leaking information about Republican Mitt Romney’s supporters during President Barack Obama’s re-election last year.

Michigan Democrat Sander Levin makes it clear in his opening statement that IRS officials will not receive a sympathetic audience from the minority party. So, IRS officials, beware: You’re on your own as this thing plays out.

Turning to the witnesses now: Rep. Camp even uses the swearing in to remind the witnesses – and the broader audience – that IRS employees have misrepresented the facts of what they knew about this unfolding scandal.

J. Russell George, the inspector general who investigated allegations from members of Congress and individual taxpayers, lets the axe fall in his opening remarks, saying he found evidence to substantiate all three allegations made against the IRS:

1) that it specifically targeted conservative groups, 2) it delayed the consideration of those applications, and3) it imposed “undo scrutiny” on those organizations.

George’s testimony is key today because he is the one who could fill in details about when – and why – the Cincinnati office made its initial decision to target tea-party groups and then resumed that process after Washington officials warned them against it. (Read WSJ’s profile of the Cincinnati office from today’s paper.)

George said the IRS asked these groups “unnecessary questions,” substantiating claims made by tea-party groups for more than a year. He also points out that none of the groups subjected to extensive scrutiny were actually denied tax-exempt status.

George, after sticking largely to the focus of his investigation, expands his criticism to management of the IRS, particularly the tax-exempt organizations in Cincinnati. He lays the predicate for the attacks to come.

In his testimony, Steven Miller, the recently ousted acting IRS commissioner, explains the scandal this way: “I think that what happened here was foolish decisions we made by people” who were “trying to be more efficient.”

Camp, after establishing the chain of command at the IRS and its superiors at Treasury, gets right to the most politicized question: Did the IRS high-command know about the leaking of confidential tax applications and did they do anything about it when they found out?

Miller is being very cautious about what he knew and when he knew it, but he doesn’t seem to be backing away from his early claim that the problem arose from well-intentioned people trying to decide how to review these new groups. He also makes it clear that the Ways and Means Committee has been looking into this question almost as long as the IRS has.

Camp ends his questioning by essentially asking Miller to define lying – a clear intimation that he and his predecessor misrepresented themselves by not flagging these problems with Congress until the revelations trickled out last week.

Camp, in his first questions to George, is going after the leak of conservative groups’ classified applications for tax-exempt status to the media. Expect to hear these allegations again and again from Republicans as this scandal unfolds.

Programmin Note: For those of you just joining us, opening statements are done, and lawmakers are asking questions to Steven Miller, the ousted acting IRS chief, and J. Russell George, the Treasury inspector general for Tax Administration.

In his first question, Levin, the top Democrat on Ways and Means, asks Miller to remind the audience who nominated his predecessor – who presided over the agency during the years much of this targeting happened: Republican President George W. Bush.

Levin cuts to the chase, asks IG and IRS’s Miller whether they discovered any political motivation in the targeting of conservative groups. Both said they didn’t uncover any political motivation. Expect this point to be probed further during the day, and coming days.

George, in response to a question from Levin, says there is no evidence that IRS officials in Washington knew about, or signed off on, the decision in January 2012 to again use targeted phrases to review these applications.

Most of the questions are being leveled at the outgoing IRS acting director, Miller. So far, he hasn’t lost his cool and has described the targeting as a misguided attempt at efficiency that went too far. “Mr. Chairman I did not mislead Congress or the American people,” he said in response to one question.

But then the recently deposed acting commissioner explained what went down from the agency’s perspective: There was an explosion of applications for this tax-exempt status after the Supreme Court eased the restrictions on certain types of political activity in January 2012.

“When you talk about targeting, it’s a pejorative term,” Miller said. “There was a lot of discussion within the system about these” new 501c4 organizations. The acting commissioner said it was perfectly appropriate for the IRS to create a process for reviewing these groups because they were a new phenomenon – a point current and former IRS officials have made repeatedly – since this scandal first erupted.

The question is whether this is justifiable scrutiny or overly politicized. Clearly, Republicans are out to make the case for the latter. Miller, in his testimony, is consistently making the case for the former.

The acting commissioner said the search terms used by the IRS agents in Cincinnati “seemed obnoxious to us, as it does to you,” but he held firm that he and his predecessor were not trying to mislead Congress in earlier testimony on this topic.

New York Democrat Charlie Rangel, a former Ways and Means chairman, uses his line of questioning to make an appeal for overhauling the tax code, including the section dealing with these tax-exempt groups that have been used to spend money in elections.

Miller validates his line of questioning by telling the former chairman, “I think it’s an area ripe for redefinition and reform.”

Wisconsin Republican Paul Ryan, after ticking through Miller and Shulman’s previous testimony to Congress in which they said the IRS was not targeting conservative groups, cuts right to the heart of the matter: “How was that not misleading this committee?”

A visibly agitated Miller explained why he didn’t think he was misleading Congress, but Ryan is clearly nonplussed and tries repeatedly to pin him down. Miller sticks to his story that he didn’t mislead Congress.

Ryan also asks why there wasn’t a liberal analogue for the searches targeting conservative groups, but Miller can’t give a full answer because he runs out of time.

Rep. Jim McDermott (D., Wash.) channels the views of many liberals and said the root cause of the scandal was the 2010 Supreme Court case (Citizens United).

He said IRS employees in the Cincinnati office “screwed up” but that the flood of tax-exempt applications that arrived in 2010 was a result of the Supreme Court decision. Many Republicans have said this characterization completely misses the point.

George, whose investigation unearthed clear violations of IRS protocols, stands by his assertion that he found “no evidence” that the searches were malicious.

Miller said the IRS high-command actually planned what seemed like a haphazard disclosure last week that the inspector general had found evidence the agency targeted groups.

Lois Lerner, the head of tax-exempt section, made the disclosure in a pre-planned question-and-answer session at a banking conference last Friday. In a subsequent conference call, Lerner seemed totally unprepared to deal with the resulting uproar.

Heads have actually rolled. Miller said he asked the agency to move someone who was involved in this scrutiny of conservative groups from their current position.

He also makes it explicit that the managers of this section of the IRS were explicitly warned that these searches weren’t acceptable, confirming a pattern that seems clear in the Inspector General timeline that Washington repeatedly tried to intervene with the staff in Cincinnati and was frequently countermanded.

Miller has been a very cool cucumber in response to pointed questioning from Republican Ways and Means members about what he knew, when he knew it and why he wasn’t more forthcoming in previous testimony to Congress. Either he’s just that confident is his facts, or he has nothing to lose now that he’s already been deposed. Or both.

Republicans may resent his insistence that he didn’t mislead them, but Miller doesn’t seem fazed by the interrogation.

Miller, in response to questions by Ohio Republican Pat Tiberi, distills his defense to this: “We provided horrible customer service here…whether it was politically motivated or not is a very different question.”

Everyone seems to agree on the first point. However, the two parties are bound to split on the latter point and could be what Congress spends the next few weeks bickering about once all the facts are on the table.

A clear pattern is developing in these questions: Republicans are trying to prove political intent, while Democrats use their questions to make the case for revisions in campaign-finance laws that allow corporations and wealthy individuals to dump unlimited sums in the tax-exempt organizations at the heart of this inquiry.

Republicans seem to be losing patience with Miller because his answers don’t change – of course, neither have their questions. Miller, in response to rough questioning from Reichert, says he doesn’t know who is primarily responsible for initiating these searches of tea-party groups.

Miller said the IRS wanted to brief Congress about the revelations that the agency had targeted conservative groups at the same time they disclosed it in the Q&A at the American Bar Association conference last week. But he admits that that briefing never occurred.

The line of questioning – and evident Republican anger – is significant because IRS officials made repeated statements to Congress that the abuse never occurred. Republicans want to pin down whether Miller and his colleagues misrepresented himself in previous appearances.

With the Justice Department looking for evidence of criminal wrongdoing, Miller’s decision to stick to his story is important because making false statements to Congress can result in a federal indictment. Just ask Roger Clemens.

More on why Congress wasn’t alerted: Rep. Peter Roskam (R., Ill.) – a lawyer in an earlier stage of his career – asked Miller if he had a “duty” to come forward and share what he knew with the committee. Miller said, “I don’t believe so” because he only had some facts, not all of the facts.

Miller said that he and Lerner had talked before last Friday’s bar association hearing, at which Lerner first disclosed what had been happening. Miller said that the IRS was also trying to simultaneously alert the committee.

Miller found fault with IRS agents in Cincinnati for requesting donor lists from some of the groups that applied for tax exemptions. (27 groups were asked for donor lists, according to subsequent testimony from George.)

Miller said, “Donors can be relevant, but they shouldn’t be in every case,” explaining that donors occasionally have a financial interest in the charities they help fund.

“To just ask for donors without a rationale, shouldn’t be done,” Miller said, before noting that half of the groups in question were not tea-party groups.

A quick timeline on who knew what when: George said he alerted Miller’s predecessor, Shulman, in May 2012. He alerted the Treasury counsel on June 4, 2012, and subsequently told Deputy Treasury Secretary Neal Wolin. The IG told new Treasury Secretary Jack Lew after his appointment.

One of the things that has outraged conservative activists is the request for donor information because some of these groups were filing for tax-exempt status in part to shield the identity of their benefactors.

And Miller, who has been defensive on some counts, certainly doesn’t condone these requests.

Miller suggested they were the result of bad management, not “bad intent,” but he is giving no cover to the IRS officials set to testify next week before the Oversight committee over a specific aspect of the scandal.

George noted that 13 of the 27 groups that were asked for donor lists were tea-party groups.

Tennessee Republican Diane Black asked George specifically when he met with Deputy Treasury Secretary Wolin, so expect other GOP lawmakers to start sniffing around on that meeting to find out what senior Treasury officials knew as the investigation played out.

George later clarified that he did not tell them about his findings, but rather that he was investigating the possibility these groups were being targeted.

Clearly, the most junior Republicans on the Ways and Means panel have grown frustrated waiting to grill the soon-to-be-former acting IRS commissioner. New York Republican Tom Reed just told Miller he doesn’t have any sympathy for the fact he lost his job, telling him “nothing bad” has happened to him.

Miller started to object, but seem to just shrug his shoulders and back down.

“This is offensive,” said Tom Reed (R., N.Y.) Looking at Miller, he said “you were not fired from your job. In my private experience, you would have been fired on the spot.” Reed complained that “nothing bad is going to happen to you. You’re going to get your full benefits.”

“Nothing bad is happening to me, congressman?” said Miller, who was ousted from his job Thursday, and spent Friday facing angry questioning from lawmakers, some of whom accused him of lying.

Pennsylvania Republican Mike Kelly draws loud applause from those in the hearing room for haranguing Miller. It wasn’t the question he asked, but rather his level of anger in reminding the acting commissioner how terrifying it can be to be subjected to an IRS audit.

It seems like it has been a long time since we’ve heard some new questions.

Arkansas Republican Tim Griffin accused the IRS of carrying out a Democratic political agenda. Democrats had wanted the IRS to scrutinize whether “social welfare” groups, which may only engage in a limited amount of political activity, were abusing their 501(c)(4) status.

“You want to know where a lot of this comes from? Look at Senator [Carl] Levin’s letter,” said Mr. Griffin as Sen. Levin’s brother, the top Democrat on the House Ways and Means Committee, looked on silently. Carl Levin “specifically mentioned” the groups that the IRS targeted, Mr. Griffin alleged. “You all were doing what Democrat senators were asking.”

Reactions: Walking to a vote after the hearing, Rep. Camp, the chairman of the committee, told reporters that “there was a real lack of detail and information; an appalling lack of management at the IRS, so we have a lot more information to get. We need to know a lot more. We didn’t get it today. And I’m going to pursue this – the committee will pursue this until we get the answers.”

So, that’s it for now. Republicans charged top IRS officials of repeatedly misleading Congress, Democrats made the case for campaign-finance reforms and Miller stuck to his theme that mistakes were made but they weren’t partisan in nature. The biggest revelation was that top IRS officials first acknowledged the abuse by planting a question in a Q&A with the American Bar Association. (Correction: Rep. Nunes was the first questioner to ask about the planted question. The initial version of this post implied that Rep. Roskam was the first to ask about it.)

Expect Republicans to keep digging around on the slightly smaller revelation that a top Treasury official was briefed on the investigation in the summer of 2012, at the height of President Obama’s re-election campaign. Miller and George were adamant that the misdeeds weren’t political in nature. But that detail should give the administration’s detractors more to chew on.

Plenty of questions remain about why IRS agents in Cincinnati started using search terms like “tea party” and “patriots” to filter groups applying for tax-exempt status, what specifically Washington did when they found out about it and why the Cincinnati office resumed similar searches months after officials in Washington told them not to. Expect some of that to come out when the House Oversight panel takes its turn with a different set of witnesses next week.

Comments (5 of 28)

This scandal is much bigger than they are letting on, however, this will be nothing more than political theatre unless they provide data. How about subpoenaing Intuit and ask them how many TurboTax federal returns were rejected compared to prior years and then analyze the rejected returns by region and individual affiliation? Once it is revealed that constitutional rights have been violated, we can then get to the heart of the matter. Until then, I can only assume this is politicians prepping for their next election.

12:06 pm May 17, 2013

Hayek wrote:

While this fiasco out of Ohio is disappointing the GOP is clearly more concerned about scoring political points rather than anything else. The GOP desperately wants to believe that this is the Watergate moment of the Democratic Party. Message to GOP..how about you spend our tax dollars on fixing the economy and the tax code instead of blathering on about some idiotic gov't employees in a regional office?

12:05 pm May 17, 2013

MS wrote:

You just have to wonder if the Repug's will ever find a conspiracy that they don't fall in love with. It seems the bitterness they feel from losing twice to Obama is simply more than they can handle.

Now regarding this hearing. I wish Miller would say. Of course we targeted groups seeking tax exempt status that had the name "Tea Party" in their name. I mean what could possibly go wrong with those applications.

The conservatives have over 3 more years to live with Obama. Then it would appear their angst will really ratchet up when Hillary takes over!

11:53 am May 17, 2013

Just wondering wrote:

I would love to see a list of private citizens who donated to conservative causes/campaigns who were audited over the past three years.. I wonder if Bush was audited? Cheney? How about conservative justices or judges? How about the percentage of FOX reporters audited compared to MSNBC reporters? How about Benghazi whistle blowers? Republican governors? NRA supporters? Anti abortion activists? You just know that there's more to this..they were emboldened every year they got away with it...you just know there's more....

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